Just to put in my 2c worth I am changing my attitude on this...

Just to put in my 2c worth I am changing my attitude on this stock to a short term buy - in my mind 2-3 months , but not to override my long term and still held belief in its long term deep value.

I am a long term holder and have been recommending a long term buy for deep value being recognised over 2013-2015 as have many brokers now reported in their research reports. But.... the nearness of the stock price to 10c and the change that makes to the pricing of trading... ie in 0.5c bid offer jumps means that the option strike of 12.5c cant by any means be be ruled out as a probability of being realised before December expiry.

There are a lot of interested parties wishing to get on board and a lot of options outstanding albeit with only 2 months to go. The problem for investors of institutional size is in being able to create a significant position of even a few percent without significantly shifting the price due to the illiquidity of the stock and many shareholders, including me, not willing to sell here before serious value is exposed over the next 6-12 months.

Accordingly one less sensitive ( price /volume wise) way to gain a position in the stock is to exercise the options on issue. If you have some already you would be unlikely to let them go at current prices for so little value at on market prices - but..given the stock can as we have just seen , move over 30% on less than 20 mill shares being traded there must be some consideration given to a professional house/s strategy of pushing the stock through 12.5c and then exercising to the options to create a suitable position in a portfolio at one known price.

I have a strong feeling now after reviewing last weeks trading that we may see this possible scenario unfold over the next few weeks.

I have a small number of them i declare but I am not a seller I still am thinking about their potential value even with such a reasonably short time to expiry in December. Given the activity and price action over the last few days/week etc these options are going to behave like 'firecrackers' as the volatility of the stock is recognised and priced in and should the stock price continue to rise as per last week ie the the important delta strike on the stock is quickly approached.

The company has always said it is very serious about realising the options as a funding source for the 42mill they carry if exercised. The company is very aggressively pursuing a marketing development and exploration program to their best capacity to see if they can convince investors that this price( 12.5c) is really good value. Sure the recent record rains in Linxing have delayed the program over the last six months due to road wash outs and bridges down but other activities are being accelerated across their huge prospective exploration areas. Linxing is going to be up and running again very soon but we may not have detailed results before option expiry in December - but we already know that its a very economic gas field despite being only partially tested.

While the dilution to shareholders will come to play this will be offset to a large degree by the value input of 42mill cash to the company from their exercise. In addition shareholders exercising will offset this factor for their holdings as well.


Basically watch this space i reckon for very low outlays significant value can be seen in these options ....perhaps.. but remember they could expire worthless if the stock is less than 12.5c by late December. You need to consider this strike /price issue and weight it against the surge in interest trading volumes and price lift we have seen over recent weeks.

Alternatively they could deliver huge leverage from current price levels..Worth thinking about i reckon.